November 09, 2007

Statement of Chairman Dodd on House Financial Service Committee Approval of Predatory Lending Legislation

“I commend Chairman Frank, along with Congressmen Miller and Watt, for their work on this important issue. As I have said before, to be effective, legislation must meet two tests: first, it must establish strong standards against abusive practices such as prepayment penalties, steering, and other problems. Second, it must provide for strong enforcement. The problem in the market today is that none of the market players have a stake in the long-term success of the mortgage. Everyone from the broker to the lender gets their cut whether or not the borrower can afford the loan. Soon I will introduce new legislation in the Senate that will be designed to provide strong standards and tough remedies to punish predatory lending and reward affordable loans. In addition, my legislation will address the abuses in the mortgage servicing industry, which, itself, is driving people unnecessarily into foreclosure. “Homeowners shouldn’t have to play financial Russian roulette when they apply for a loan and just hope for the best. There needs to be strong new rules of the road for everyone so that homeowners aren’t victimized by predatory lending or servicing practices that cause them to lose their homes.”